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Mandala Airline Suspends Services

Low-Cost Indonesian Carrier Mandala Suspends Services and Returns Rented Planes, Vowing to Resume Services in 45 Days. 2 Daily Bali Flights Affected.

(2/19/2011) The Indonesian budget carrier Mandala Airlines suspended all flights to 13 domestic and 3 regional destinations effective Thursday, January 13, 2011. The airline has said the closure is “temporary” and only for 30-45 days while the company explores options to deal with mounting debt.

Bisnis.com reports that Mandala is seeking a new investor with fresh capital capable of purchasing 5 new aircraft and renting 5 more to create an armada of 10 planes required to operate a scheduled airline in Indonesia.

President Director, Diono Nurjadin, confirmed that Mandala has returned its remaining fleet of three Airbus 320 and two Airbus 319 to the companies who provided the planes under lease agreements.

The current shareholding of Mandala is comprised 51% by the Indonesian company Cardig International and 49% by the U.S. company Indigo. Diono confirmed that the current shareholding could be diluted by a new investor with fresh cash. “This depends on discussions with candidate investors. There are several names (of new investors), but they can’t be announced at this time,” explained Diono at a press conference announcing the closure on Wednesday, January 12, 2011.

Diono dates Mandala’s strife to March 2010 when leasing companies began demanding the return of aircraft. At its peak, the airline operated 11 aircraft.

An airline spokesman, Nurmaria Sarosa, said one factor that caused problems for Mandala is the high cost of leasing aircraft.

According to Bisnis.com, the airline is seeking debt relief from the Jakarta Courts in order to stave off bankruptcy proceedings. If the current filing is accepted by the Courts, the airline will have 45 days to present a business restructuring plan which, in the case of Mandala, would almost certainly include a new investor.

Many of the airline’s pilots have already been assigned jobs with the Singapore carrier Tiger Airways on a temporary basis until the future course becomes clear.

Diono remains optimistic that sometime within the coming 45 days Mandala will resume commercial flight operations.

Prior to its suspension of operations, Mandala was operating daily flight services from Bali to Yogyakarta and Surabaya. Onward flight connections were available to 11 more domestic and 3 international destinations.